Business risks Flashcards
Entity operates in fast paced environment.
What is business risk
Company products could be outdated by superior products
Stope company achieving desired profit margins
Major customer. Is struggling to pay their debts
What is the business risk?
If cust can’t pay their balance company won’t receive cash- will reduce CASHFLOWS
Debt will need to be written off- will reduce profits
FUTURE REVENUE will also decrease as major cust will no longer be trading with client
Company purchases all goods from overseas supplier resulting in foreign currency transactions
What is the business risk?
If exchange rates move in adverse direction - cost of purchases will be higher
Resulting in reduced profits
Negotiated contract with new supplier for all raw materials
What is business risk?
Risk disruption to manufacturing process if new supplier does not deliver right QUALITY of products/ at right RIGHT TIME
Leading to delays in supplying customers
Waiting on confirmation from ban re Overdraft being extended
What is business risk?
Failure of bank to renew overdraft.:
- increase risk of INSUFFICIENT FINANCING
/ more COSTLY financing
